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Buying a new home is a big and exciting step to take in life. If you’re like most people, you’ll likely need to get a mortgage and may be asking how does mortgage underwriting work?

Before your mortgage can be approved, your application will undergo a mortgage underwriting process. During this process, a credit lender will “assess your creditworthiness” and ultimately approve or reject your mortgage application.

Now, not everyone understands the ins and outs of this process. But, luckily, we’re here to help you understand exactly what happens when a mortgage goes to underwriting.

How does mortgage underwriting work?

Mortgage underwriting refers to the process the lender goes through to determine your creditworthiness. In other words, the lender will consider how risky it would be to lend you the money and how likely you are to repay the mortgage, based on various factors such as your financial situation and credit history.

What are the steps of the mortgage underwriting process?

Mortgage underwriting will vary between creditors. However, you can generally expect your mortgage application to go through these steps.

1)    Pre-soft credit check

When doing a soft credit check, the lender is likely to have a quick look at the overview of your financial history. At this stage, applications may be rejected based on bankruptcy or age.

2)    Scorecard

After the soft credit check, a lender will award you a score based on factors such as your income, debt levels, credit history and employment status. There is generally a minimum score that you need to meet in order to progress in the application process.

If you pass this minimum score, you might receive a Mortgage Agreement in Principle. This is usually a positive indication that your application could be approved.

3)    Verifying income and assets

Now the lender will verify your income and potentially request other financial information such as your tax returns or bank statements. In terms of assets, items such as your bank and investment accounts, retirement savings, life insurance policies and business stocks you own will be valued.

Based on this information, you will either be deemed qualified or not. If you qualify for your mortgage, the creditor will now send you a pre-approval letter. This will indicate that they will lend you a certain sum based on the information provided in the application.

4)    Property appraisal

The creditor will conduct their own, independent appraisal of the property and award a value to it. The purpose of this appraisal is for the lender to determine whether the amount you have offered to pay for the house is suitable based on its condition as well as when compared to the other houses around it.

Factors, such as the following will be considered:

  • Property characteristics - the property's market value is based on factors such as its location, condition, size, etc.,
  • Market conditions - the current real estate market trends are considered, including supply and demand
  • Physical inspection - an on-site inspection is conducted to evaluate the property's condition, noting any significant defects or issues that may affect its value
  • Comparable sales - the appraiser compares the subject property to recently sold similar properties in the area
  • Neighbourhood analysis - the appraiser examines the neighbourhood’s characteristics, amenities, and overall desirability
  • Property improvements - any upgrades or renovations made to the property
  • Legal considerations - the property complies with local bylaws, building codes, and other legal requirements

Finally, the appraiser provides a detailed report containing their findings, including the final appraised value of the property, which plays a crucial role in the underwriting process for mortgage approval.

5)    Title search and insurance

Before a creditor lends you the money for your mortgage, they want to ensure that there are no claims on the property you’re planning to buy. To check this, a title company will conduct a title search where they research the property’s history.

This will then indicate whether the property can be transferred or not. This information will also be used by the title insurer to issue an insurance policy. This policy serves as an assurance that the research conducted was accurate and essentially provides protection to both the creditor and property owner.

How long does it take a mortgage to go through underwriting?

The length of time it takes to go through the mortgage underwriting process will vary from case to case. Generally speaking, you can expect the process to take 4-7 working days to complete. If your application is uncomplicated, it’ll likely go through an automated, electronic underwriting process, and the outcome can be determined within a few hours. However, less straightforward mortgage applications will probably be processed manually and will take longer to complete.

This will vary based on whether supporting documents or information is required by the underwriter, how efficiently the lender goes through the mortgage underwriting process as well as how in demand the lender’s services are.

It’s important to remember that underwriting is not the only part of the mortgage application process. Once this stage of the mortgage application is complete, you may still have to wait a while before the entire contract is complete.

The potential decision of a mortgage underwriting

After your application has been reviewed by the underwriter, you will receive one of three decisions: denied, suspended, or approved.

If you’re mortgage has been declined, you will need to determine what went wrong in the application and see what alterations you can make before reapplying.

A suspension means that the underwriter cannot make a decision as there is some documentation missing, such as verifying the stats of your employment. A creditor will usually ask you to provide more information so that the application can be reactivated.

Lastly, the best outcome is an approval. This will likely come with conditions, such as providing additional documentation. Once these conditions have been met, your mortgage should be approved.

Contacting us

Discover the intricacies of mortgage underwriting and secure your dream home today. Contact ams: for expert guidance and we can answer your questions about “how does mortgage underwriting work?”  Let us help you find the perfect mortgage solution tailored to your needs when you call 0121 4000 052 or visit our contact us page.